Griffey Communications recently realized $120,000 in operating income. The company had interest income of $25,000 and realized $70,000 in dividend income. The companys interest expense was $40,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. What is Griffey Communications' tax liability?

Assume a 50% dividend exclusion for tax on dividends.

$40,400

$32,000

$37,000

$35,000

$35,950